Estate Agent Clause - we have to pay their fees if buyer pulls out after exchange?

attila_

Hello - we are just negotiating with our EA and going through their T&Cs. One of the clauses they are saying is that we must still pay their fee in full if a buyer exchanges contracts but fails to complete.

I'm aware there are hefty penalties for buyers pulling out but I've never come across this before. Seems a little unfair no?

I'm also confused at what point do we pay EA fees is it after exchange or upon completion?

Thanks in advance!

mrginge

aside from the fact that it is really not going to happen, wouldn't you simply recover the cost from the buyer anyway?

lee111s

If you're not happy discuss it with them. That is if you've not signed anything.

All terms are negotiable, if they won't budge then you don't sign and look for an alternative.

ACG

Exchange of contracts is pretty much the point of no return. Both parties are legally bound to complete on the sale, so if one was to pull out you could sue for costs (ie the estate agents fees plus any other fees you have incurred).

G_M

Normally the EA fee is paid on Competion (using the money received). If using a solicitor he will pay them.

If the buyer fails to Complete, you sue the buyer for your consequetial costs.

Pookie85

There are a million things to worry about when buying, and this isn't one of them

It's unlikely to happen, but sue down the chain if it does.

attila_

This is why I love this forum, I can always count of good, advice. Thank you very much folks, very helpful and put my mind at rest!

Sent them a note let's see what they say.

eddddy

attila_ wrote: »

Hello - we are just negotiating with our EA and going through their T&Cs. One of the clauses they are saying is that we must still pay their fee in full if a buyer exchanges contracts but fails to complete.

I'm aware there are hefty penalties for buyers pulling out but I've never come across this before. Seems a little unfair no?

I'm also confused at what point do we pay EA fees is it after exchange or upon completion?

Thanks in advance!

EA contracts are almost always: 'fees due on exchange and payable on completion'.

In fact the Property Ombudsman Code of Practice for Residential Estate Agents says:

5k Except for any previously agreed additional costs, commission fees will become due on exchange of contracts (in Scotland, conclusion of missives).

source: http://www.tpos.co.uk/downloads/TPOE27-2%20Code%20of%20Practice%20for%20Residential%20Estate%20Agents%20Effective%20from%201%20August%202014.PDF

As others have said, the risks associated with this are minimal.

(But it's really great that you are checking the EA's contract so carefully before signing!)

makeitstop

I'm not sure whether this is common practise, but I know an agent whose terms states that their fee becomes payable by a seller, even if a prospective buyer engages a solicitor the "seller" decides not to proceed with the sale, for whatever reason.

Seems a bit harsh, as so many things could happen during a sale which lead to one party having to withdraw from it before exchange.